Using Credit Cards Hurt Gas Station Owners

Several Gas Station Owners have been hit hard by the rising gas prices, but not where you would expect. Credit card fees are eating into their profits and they're beginning to accept cash only.

This is how it works...

Credit card companies make it on both ends of the sale. First they collect merchant fees for every sale and then they collect interest on consumers who don't pay off their monthly short-term loan. Usually these fees run a few percent and sometimes as high as 5% for low volume merchants.

I can remember back when processing credit cards was a real pain in the butt. You had to look up the card in the "dead-beat" list that had a publication of thousands of cards that were stolen or over extended.

Then you called Visa or Mastercard to get approval for the sale. You talked to a live operator stating the facts about the card. The whole process took several minutes while angry customers wait in line behind them.

Sometimes you were instructed to cut up the card in half which was sometimes golden especially if the customer was a real prick. But as a merchant, you lose out on a sale and make your customer angry at you.

Today, you just swipe the card thru a card reader and you get back an approval in a few seconds. The process is all automated and hardly justifies the merchant fees they charge since there is no live operator anymore.

So are Gas Station Owners Justified in not Accepting Credit Cards?

Not really since the 2% merchant fee is built into the price. Eighty-percent of their customers are going to use credit and the other 20% will pay by cash. By using your gas card or cash back card, this price increase goes back to you in rebates.

Basically what they can do is lower the price of the gas to compete with other local gas stations. They will push their customers away, have lower sales and eventually go out of business.

Are You Addicted to Credit Cards?

Jennifer Levitz wrote an interesting article in The Wall Street Journal about credit card addiction. She presented a view where consumers were overextending their credit cards to meet compulsive spending habits.

I would argue that the true addiction is not the credit cards but is actually an addiction to shopping.

While it’s not difficult to understand her point of view, overspending, not budgeting and simply paying interest is ultimately the culprit of overextension.

Of course there are shopaholics that continuously go shopping where it wouldn’t matter if they had an endless stream of cash or credit to satisfy some compulsive need.

There really is no addiction to credit cards, but an abuse — either by mismanagement or illness — that causes the ultimate problem.

Solution to Credit Card Addiction

So is there a way to overcome this problem? The answer might not surprise you since it’s as simple as paying off your credit card as soon as possible.

1. Each month pay off as much as possible. Double, triple your payment. Use cash to buy everything else until your cards are paid off.



2. Keep track of how much and what you are spending on each month. Try to eliminate unnecessary purchases.

Once you paid off your cards, a great burden of 20% in interest rates will be lifted off your shoulders.

If you decide to use your cards again, use them only for the monthly expenses and pay the entire credit card balance off each month avoiding late fees and interest.

Here's another Way to Save with Credit Cards

My wife received a really good credit card offer from American Express today. The Blue Sky is cash back rewards card where you accumulate one bonus point for each dollar you spend.

After you spend your first $500, American Express gives you 7,500 bonus points. This is equivalent to $100 off any airline ticket, hotel stay, and car rental or travel package. You must redeem the bonus points in blocks of 7,500.

Unlike Discover, you’re limited to the travel industry. But American Express pays you 1.3% ($100/$7,500) instead of 1% for Discover purchases.

Blue Sky has no annual fees; the APR for the first 6 months is 0%! Zero-percent loans are nice to have even if it’s only for 6 months. Just set aside what you spend and pay it off before they jack up the rate.

After six months, the rate goes up — at least in my wife’s case — to 12.24%. Your rate maybe higher or lower depending on your credit score. Since I pay off all my balances, I never get charged interest. But still, it’s nice to know that it’s a fairly reasonable rate as far as credit cards go.

Another thing I like about this card is that you’re not tied to any specific airline. I use my United Card to keep my miles alive, but I can’t even remember flying United. We mostly fly Delta or Alaska, so it’s a waste to carry the card and use it to save money. I would like to get Blue Sky, but I already have two American Express Cards, one for personal and one for business expenses.

Since my wife doesn’t have an American Express Card, this is the one she should apply for in her name to help her maintain her credit history. Plus, we can use the $100 American Express hands out to help offset the cost of our vacation next year!

Alaska Air – My Favorite Airline but not my Favorite Credit Card

Alaska Air ranks up there as one of my all time favorite airline carriers. Considering that I’ve racked up over 100,000 frequently flyer miles, my guess is that I’ve flown Alaska more than 50 times.

Despite the frequency, it takes a long time to accumulate miles since they pretty much dominate the LA/Seattle market and those are 2,000 round-trip miles.

Since it takes 20,000 miles to get a first class upgrade, I’ve been saving upgrades for longer flights. That is, vacation to Alaska where the 3,500 mile trip can take up to 7 hours of flight time with a stop in Seattle.

So does it make sense to get the Alaska Air Credit Card? The answer is yes if you live on the west coast and fly between Portland, Los Angeles or Seattle and take frequent trips between these cities. The benefits of moving up to first class are well worth the annual card fee.

If you’re planning to take a vacation or fishing trip to Alaska, and I highly recommend that you do, it’s worth enrolling in Alaska’s frequent flyer program to offset the first class ticket price. (It’s a long flight to Alaska, and believe me, you want to fly first class.)

With the miles you accumulate from your credit card purchases and enrollment bonuses, you should get enough to cover your vacation trip.

Other than frequent business use or one or two vacation trips to Alaska, I would not recommend the Alaska Air Credit Card.